May 9, 2018 at 5:29 AM (PT)

SINCLAIR BROADCAST GROUP has announced its first-quarter results and the official word of which television stations it will be selling to FOX as part of divestitures aimed at getting the company's purchase of TRIBUNE MEDIA approved by regulators.

The Financials

SINCLAIR first-quarter total revenues rose 6.1% year-to-year to $665.4 million, with net income falling from $57.2 million to $43.1 million (61 to 42 cents/diluted share). Media revenues rose 6% to $643.7 million, with political up from $2 million to $7 million, distribution revenues up from $276 million to $314 million, and digital up 71%. As always, the company did not separately report what the revenues generated by its radio properties in SEATTLE were.

"Our first quarter came in well ahead of guidance in all key financial metrics," said CEO CHRIS RIPLEY. "As expected and reflected in our first quarter guidance, advertising revenue was soft largely due to the lack of OLYMPICS and SUPER BOWL on many of our stations and with the auto category coming off its recent highs from last year. Fortunately, our distribution revenues now make up approximately half our media revenues which makes our business model very resilient to ad market volatility. Furthermore, growth and initiative advances in digital, network, programmatic and addressable advertising are showing results and becoming larger contributors. Lastly, our acquisition of TRIBUNE MEDIA is now approaching the final stages with an anticipated closing in late second quarter/early third quarter of 2018, as we await governmental approvals."

The company's Board of Directors has also declared a quarterly cash dividend of $0.18 per share on its Class A and Class B common stock, payable on JUNE 15th to shareholders of record on JUNE 1st.

FOX TELEVISION STATIONS CEO JACK ABERNETHY said, "This transaction illustrates FOX's commitment to local broadcasting and we are pleased to add these stations to our existing portfolio. With this acquisition, we will now compete in 19 of the top 20 markets and have a significantly larger presence in the west, which will enhance our already strong platform. This expansion will further enrich our valuable alignments with the NFL, including our new THURSDAY NIGHT FOOTBALL rights, MLB and college sports assets. We are also happy to add many talented TRIBUNE employees to our group, some of whom we know well."

RIPLEY added, "After a very robust divestiture process, with strong interest from many parties, we have achieved healthy multiples on the stations being divested. While we continue to believe that we had a strong and supportable rationale for not having to divest stations, we are happy to announce this significant step forward in our plan to create a leading broadcast platform with local focus and national reach. We expect the combined company to continue to advance industry practices and technology, including the Next Generation Broadcast Platform, and to benefit from significant revenue and expense synergies."

"After the divestitures, we are now acquiring $4.6 billion of enterprise value, which includes $2.4 billion for the core TV and entertainment business, $0.5 billion for real estate held for sale and $1.7 billion for TELEVISION FOOD NETWORK (TVFN). We expect 2017/2018 average synergized net acquired cash flow of $390 million to $410 million on the TV and entertainment segment, reflecting a 5.9x multiple, significantly better than the under 7x multiple initially announced a year ago. By year end 2018, we expect adjusted total net leverage, after synergies and including the TVFN distributions, on a trailing eight quarter basis, to be approximately 4.4x and we expect to quickly deliver from there over the next twelve months. Furthermore, the TVFN partnership financial performance has been extraordinary over the past year, and based on DISCOVERY's recent 8K Filing valuing the TRIBUNE stake at $2.1 billion, the core TV and entertainment pro forma purchase multiple is further reduced from 5.9x to 4.9x.

"Including the TRIBUNE acquisition (after the related divestitures) and pro forma for expected synergies, SINCLAIR's 2017 and 2018 free cash flow is expected to be $1.550 billion to $1.575 billion, or $6.35 per share. The combined footprint that will reach 62% of U.S. TV households or 37.4% pursuant to the FCC national ownership cap."